Quoting Warren Buffet, the Oracle of Omaha, “It’s good to learn from your mistakes. It’s even better to learn from other people’s mistakes.” Warren Buffet is arguably one of the best and greatest investors of all time. But the topic of our discussion is not his greatness (unfortunately), but the indiscretion in the cryptocurrency trading, which reads, “Stay away from these deadly mistakes while crypto trading.” Now, the first line makes a lot more sense, doesn’t it?
This article will be followed by a few mistakes that every rookie commits. But this is certainly not a reason why you should be a victim of the same, in your initial days. Like I mentioned before, wise people learn from other people’s mistakes. But the most important trait of expert traders which remains unshaken is to be humble. Kick pride, greed, wrath, envy, sloth, and deceit out of your system.
Now, let’s begin with some of the deadliest mistakes that you MUST avoid at every cost before you start trading at a bitcoin billionaire platform.
You chase the pumps and dumps
Before you read further, you should know what pumps and dumps are. Pumps and dumps are the kinds of cryptocurrencies which first soar up, that is pumps, and then flicks down, that is dumps, leaving you in the middle of nowhere. It is easy to fall for the fear of missing out and pile up. You cannot ignore the fact that sometimes it does pay off, but most of the time it will get you in a fetal position, from where recovery will be almost impossible.
You need to understand that if the price of a cryptocurrency skyrockets, from the impact of certain decisions, say for instance promotion of a major influencer, it isn’t always a sign of a pump and dump scheme in place. However, if you are unaware of the reason, you will get in a trap of rising prices. Some pump and dump groups guarantee instant profits with zero efforts. Most novices fall prey to it, and later regret and learn. To conclude, don’t invest until you are sure about the reason for the coin’s rising prices.
You buy into Illiquid markets
The mechanism on which the price index of cryptocurrency functions is very simple — people must be willing to buy it. This is the essence of altcoins and emerging small stock exchanges. Their fundamentals might really attract you, and you may really admire them, but no one is willing to invest in them. It’s exactly how human nature works — until many people are on the same boat as you are, you don’t want to travel the route. Not because it’s not safe but because you don’t want to risk your life with a boat that’s rarely used. There’s nothing wrong with investing in these coins as a long-term HODL. But if you are a short-term player, these cryptocurrencies are also known as ’undiscovered gems’ — they do not give you the required liquidity. Rookies and novices learn that after selling these at a price less than what they had expected, because the time it took to hit the rising bar was indefinite.
You go in for the wrong price
Very silly mistakes can cost you a fortune. There have been cases where misreadings caused people to sell their coins at prices lower than 10 times of what they had got them for. This is a common occurrence when the discussion is about altcoins since they are priced at fractions of bitcoins.
For example, suppose you set the sell order at 0.000067 and discover later that you missed a zero and placed it at 0.0000067. There will be exchanges to help you and spare you the trouble, but at the same time, there are exchanges that are not so cooperative and accommodating. It’s very easy to avoid such silly errors. Just double-check both the buy and sell price before you proceed with the final bidding.
You bet on your emotions
You know what acting on your emotions will get you into? Revenge trading. Perhaps the price of the coin you backed out on buying just hiked. The coin you bought, which was surely going to the moon, didn’t and flopped. This may leave you angered and frustrated. If you fall prey to these treacherous emotions, it will lead you to revenge trading which I can guarantee is not a smart route to take. You will pile up everything on the next coin in green, not researching it, knowing nothing, and will just expose yourself.
This is what acting on your emotions will cause. We have talked about how important it is to know why the coin’s price is rising, and what your entry and exit propositions are. But revenge trading suggests the exact opposite and pushes you to even the score. Most of the time, you will end up in tears. It’s better to disassociate yourself from your emotions when it comes to trading, especially cryptos.
Too many trades, spoil your gains
In one word, overtrading. There will be days when you wake up to the news of a 20% hike in the bitcoin you bought last night. The most common reaction would be — so why wait, sell and earn, right? Not really. It might seem to be simple and quick money. But trust me, there is no worse feeling than selling your coin and seeing it hike much further. It might be a safe bet, but overtrading allows very minimalistic profits, along with the bomb of exchange fees that you have to pay on every transaction.
You THINK you are the best
There is a broad line of difference between self-belief and overconfidence. Think about the next example. For the past few days, everything you have bought is hiking. People are coming to you for advice. You repeat the process and see everything is doubling. In other words, you are the man — or woman. But what happens? It gets to your head. And then everything goes for a toss. Does this situation sound similar to you? A little self-belief is fine but getting cocky and thinking everything you touch will turn to gold will get you nowhere. Especially in the world of crypto trading.
Now that you are aware of the most common ‘crypto’ mistakes, don’t let them poison you. Stay alert and try to eliminate these risks. The list of mistakes doesn’t end here; there are many others. For example, if you put the wrong coin in an exchange wallet. From there, there is no looking back. Don’t think stock exchanges will help you.
Remember that every mistake gives you warning signs first. Be quick to capitalize on them and you will never fall victim to the traps.
